Domestic car sales in Thailand took a sharp dive in July 2024, registering a year-on-year decrease of 20.5%, according to the Federation of Thai Industries (FTI). The significant drop, which saw sales volumes fall to 46,394 units, is largely attributed to the country’s sluggish economic growth and mounting household debt.
The decline in car sales mirrored a 16.6% year-on-year fall in overall car manufacturing, with production numbers dropping to 124,829 units for the month.
Banks have tightened their lending requirements amid concerns over rising non-performing loans, which soared by 29.7% in July compared to the same period last year. These loans, now valued at 250 billion baht, have made it harder for potential buyers to secure auto financing. This is compounded by the nation’s household debt-to-GDP ratio, which stands at a staggering 91%.
Particularly affected were pure pickup sales, which plunged by 35.1% year-on-year, totalling just 13,167 units in July. This steep decline in the pickup segment was a key contributor to the overall drop in domestic car sales.
The Thai government’s 2024 budget allocation was delayed due to the lengthy formation of the Pheu Thai-led coalition government following the May 2023 general election. Although the budget plan was finally approved in March, the delay dampened economic activity and contributed to the prolonged slump in car sales.
As a result of the weak domestic market, the FTI has reduced its car manufacturing target for 2024 to 1.7 million units, down from the initial goal of 1.9 million units.
Adding to the industry’s woes, Thailand’s car exports saw a 22.7% year-on-year drop in July, with 83,527 units shipped. Geopolitical tensions, particularly in the Middle East, have disrupted shipping routes and caused delays in delivering vehicles to key markets in the region and in Europe.
From January to July 2024, total car exports fell by 5.39% compared to the same period last year, with 602,567 units exported. The FTI cited geopolitical conflicts as well as economic slowdowns in Africa, Asia, and the Americas as contributing factors to the decline in export performance.
With domestic and export sales both in decline, Thailand’s automotive sector faces significant challenges in the months ahead. Industry leaders are hoping for swift government intervention to revive the economy and restore consumer confidence. However, with high household debt and global economic uncertainties still looming, the road to recovery may be a long one for Thailand’s auto industry.
